Archive for February 2013

The 4 Most Useful HR Metrics for the Future

February 25, 2013

Lately everyone seems to be talking about big data and its effects on human resources. HR metrics are the foundation of HR data analysis. They are also the only concrete way to measure the effectiveness of your HR efforts. Popular metrics that have been around forever include:

• Cost per hire
• Absenteeism
• Benefit cost per employee
• Turnover rate

These are useful metrics, but one common problem among them is that they do not have predictive or strategic planning value for HR departments. They report on current or past HR activities, but provide no guidance as to what can be done to improve a company’s future HR effectiveness. A KPMG report stated that the biggest challenge for HR in the coming years will be moving away from its “tendency to report historical data” and moving toward “forward looking analytics designed to improve business understanding of employee demands and desires.” These “forward looking analytics” are metrics that HR professionals can use to alter their HR strategy for better hiring and retention decisions in the future. Here are four metrics that HR departments should focus on for the future:

1. Retention rate of employees in critical roles

Identify which roles have the biggest impact on your company’s success and the positions that are the most difficult to fill with the right talent. Next, determine the retention rate for each of those positions. This information allows you to see if you are wasting money by repeatedly hiring and onboarding new employees for those positions. Once you have identified key roles with low retention rates, figure out why it is so difficult to keep people in those positions. Is the workload unreasonable? Would an assistant help? Make an action plan for changing the requirements of the position so that you can keep good talent in your organization’s key roles.

2. Career progression metrics

This can be a group of metrics that include data on the average length of time before promotion, average salary raise per promotion, and the number of job titles before an employee reaches management level. Employees cite opportunity for career progression as one of their top criteria when looking for a new job. Use career progression metrics to see how attractive your company looks to ambitious candidates. If promotions only happen rarely, work with managers to figure out why. Maybe most employees are not performing well enough to deserve a promotion. This could be traced back to inadequate training or a number of different issues. Identify the problem and implement a solution to ensure that future candidates have the opportunity to advance if they work hard.

3. Percent of employees who support organizational changes

Employees who do not like the direction a company is moving in are not likely to stay. Each time a major change is implemented, take a survey of how employees feel about the change. You can use this information to serve as a liaison between executive decision-makers in the company and employee opinions. You may find that a majority of the changes in your organization are not supported by employees. This could be the possible cause of a high turnover rate.

4. Employee engagement index

How can you keep good employees around if they are not engaged and happy? Find a way that works for your organization to measure employee engagement. A survey is a popular choice. Use the survey results to create an employee engagement scale and goals for employee engagement. Whenever employee engagement is not on target, look into specific survey questions to find out why and implement a solution.

Traditional HR metrics are still important, but they should be augmented by metrics that allow you to make necessary changes in future HR practices. Use this data the right way and you will find new talent thriving in their positions and happy at your company.